Nikkei 225 Strengthens Ahead of the Bank of Japan Decision

Investors are focused on the Bank of Japan's policy meeting on 16 June. According to a Reuters survey published on 10 June, the majority of economists expect the benchmark interest rate to be raised to 1% — a level not seen for decades. The market is also reacting to the Producer Price Index (PPI) data released on 10 June, which points to ongoing inflationary pressures.

For the Japanese market, not only the rate decision itself matters, but also its impact on the yen. Monetary policy expectations influence the outlook for export-oriented companies included in the Nikkei 225 index (Japan 225 on FXOpen), prompting investors to assess both the BoJ's decision and any signals regarding policy moves in the second half of the year.

Technical Picture

After completing its upward trend near the 68,700 area, the Japan 225 index came under pressure and formed a corrective trend structure. However, sellers have lost momentum in recent sessions, and following the break of the trend, the price has moved above the upper boundary of the profile. If the current bullish impulse persists, the resistance area around 67,900 could attract renewed selling interest. Should buying activity weaken, the upper boundary of the current profile at 65,200 may serve as the nearest support zone.

A deeper decline would bring the Point of Control (POC) area at 64,190–64,300 into focus. If sellers manage to push the price below both the POC and the lower boundary of the profile, the green support zone around 62,400 could become the next key downside target.

RSI + MAs currently shows readings of 64, 53 and 51. The main RSI line remains above both averages and has not yet entered overbought territory. The moving averages are turning higher and have approached the upper boundary of the neutral zone near 55. It is also worth noting the elevated trading volume recorded on 12 June, which adds significance to the current market setup.

Key Takeaways

The market is awaiting the Bank of Japan's interest-rate decision amid a recovery following the recent correction. The next move may depend both on the regulator's rhetoric and on the market's ability to remain above the upper boundary of the profile. RSI + MAs remains in the green.

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